U.S. Chip Sanctions on China Could Stunt Taiwan's Tech Sector

New Export Controls Threaten to Squeeze Taiwanese Suppliers of Key AI Components

Taipei, Taiwan – The recent wave of U.S. sanctions targeting exports of advanced artificial intelligence (AI) chips to China is poised to deliver a significant blow to Taiwan's technology sector, according to industry analysts.

The new licensing requirements, imposed by the United States on companies like Nvidia Corp. and Advanced Micro Devices, Inc. (AMD) for their chip exports to China, are expected to have a ripple effect, impacting their suppliers, many of which are based in Taiwan.

According to Liu Pei-chen (劉佩真), a researcher at the Taiwan Industry Economics Database, the restrictions will heavily impact Nvidia and AMD. She stated that these American companies will experience significant challenges, with Taiwanese suppliers also feeling the pinch.

The U.S. Department of Commerce (DOC) announced the measures, targeting chips crucial for AI development, including Nvidia's H20 and AMD's MI308. A DOC spokesperson confirmed that the policies are aimed at safeguarding national and economic security.

An anonymous industrial expert expressed skepticism, stating that the sanctions were somewhat "ridiculous," as the targeted chips were already designed to comply with existing U.S. export regulations. The expert noted that China likely has stockpiles of these chips, mitigating the immediate impact.

However, the expert anticipates that the primary financial burden will be on Nvidia and AMD. Furthermore, the expert suggests the sanctions could inadvertently accelerate China's efforts toward semiconductor self-sufficiency, pushing Chinese chipmakers to develop competing products.

The expert highlighted the Ascend 910B processor from Huawei as an example, which closely rivals Nvidia's H20. The conclusion is that the sanctions will bolster the Chinese semiconductor industry, impacting not just Nvidia and AMD, but also their Taiwanese suppliers.

According to local analyses, prominent Taiwanese companies such as Inventec Corp. and Mitac Holdings Corp., which supply AI servers to Chinese cloud service providers like Baidu, Alibaba, and Tencent, are among those most likely to be affected.

Nvidia revealed on Tuesday that it anticipates a quarterly charge of approximately US$5.5 billion due to the export restrictions on its H20 GPUs. The company generated an estimated US$12 billion to US$15 billion in revenue from its H20 GPUs in 2024.

AMD also announced on Wednesday that it would incur charges of about US$800 million tied to the sales restrictions on its MI308 GPUs.

The escalating trade tensions have already begun to impact the market. On Wednesday, the Taiex, the weighted index on the Taiwan Stock Exchange, fell 1.96 percent, with the electronics sector declining by 2.27 percent.